Exemption on home loan may be raised to Rs 3 lakh
New Delhi, February 12
In a bid to boost housing sector credit, the government is contemplating to enhance income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.

Indorama to invest Rs 1,000 cr in Baddi
Chandigarh, February 12
Global textile conglomerate Indorama Corp is setting up its first spandex manufacturing facility in Baddi. The facility, to be commissioned next month, will be the first spandex manufacturing facility in the world.

Blackberry to expand footprint, new OS in H2
New Delhi, February 12
Facing competition from smartphone makers like Samsung and Nokia, Blackberry-maker Research in Motion has chalked out aggressive plan for India of increasing its footprint to 160 cities, besides launching new devices and latest Operation System 10 soon.
The BlackBerry maker has a presence in about 80 cities in the country now and is keen to tap the burgeoning demand for smartphones here.
"In terms of expansion, we would like to strengthen our existing presence.
As far as new cities are concerned we would like to double our presence this
year and go to every city which has a demand for smartphones," RIM India
Head Sunil Dutt said.

22 cr transactions under I-T scanner
New Delhi, February 12
In a major crackdown, the Income Tax Department has under its scanner more than 22 crore instances of high-value transactions in the country and abroad which include unreported credit card operations and deals in real estate.

Press members and Boeing officials tour the interior of a Boeing 787 Dreamliner during a press preview in Singapore on Sunday. Boeing 787 Dreamliner is here for the Singapore Airshow 2012 as part of their ‘Dream Tour 2011-2012.’ —
AP/PTI

New Delhi, February 12
In a bid to boost housing sector credit, the government is contemplating to enhance income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.

The government is considering to raise the tax deduction limit for housing loan in the coming Budget, sources said.

The Budget is scheduled to be tabled on March 16.

At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for a house.

Besides, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs 1 lakh per annum.

With the property prices and interest rates rising with each passing year, there is need to revise the limit, sources said.

In order to arrest the declining growth rate, the industry associations have demanded raising the tax limit ceiling for the housing loan.

According to Ficci Secretary-General Rajiv Kumar, the exemption should be harmonised with the rising interest rates and increased to at least Rs 2.5 lakh.

"We recommended that the existing tax deduction limit on income tax of an individual should be increased from the current level of Rs 2.5 lakh to at least Rs 5 lakh," said CII Director-General Chandrajit Banerjee.

Of this, Rs 3 lakh should be towards interest payment to offset the impact of high interest rates, he said, adding the remaining Rs 2 lakh should be exclusively towards principal loan repayment as the present limit of Rs 1 lakh is already overcrowded with several other items.

Echoing views, Assocham and PHD chamber said that exemption limit need to be raised both for interest and principal.

As per the Direct Taxes Code, which would replace the decades-old Income Tax Act, there is income tax exemption for up to Rs 1.5 lakh paid as interest on housing loans in a year.
— PTI

BUDGET 2012

At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for a house. Besides, borrowers can have exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs 1 lakh per annum.

Chandigarh, February 12
Global textile conglomerate Indorama Corp is setting up its first spandex manufacturing facility in Baddi. The facility, to be commissioned next month, will be the first spandex manufacturing facility in the world.

The new unit at Baddi, which is the groups’ first manufacturing facility in India, will also be the first spandex manufacturing unit in the country. The branded product by the company has been named Inviya, and initially the company will be producing 5,000 tonnes per annum of Inviya. So far, the country’s requirement of spandex (6,000-7,000 tonnes per annum) is being met through import from other countries, including China.

Talking to The Tribune here today, RD Gupta, business head, Indorama Industries, said the new facility at Baddi is being set up with an investment of Rs 1,000 crore. “We propose to set up the unit in three phases, with the first phase of the unit being commissioned next month. We have invested Rs 400 crore in the first phase. The remaining investment of Rs 600 crore will be made in the subsequent phases. Once the plant is fully commissioned, the total Inviya production will be 15,000 tonnes per annum,” he said.

Gupta said initially they will be supplying 3,000 tonnes per annum of Inviya in the domestic market, while the remaining 2,000 tonnes will be exported to Bangladesh and Sri Lanka. “Later, we will also start exporting spandex to Indonesia and Pakistan, when the most-favoured nation status is granted by Pakistan to India. In the very first year itself, we are expecting the sales turnover of over Rs 250 crore,” he said.

He said though the prices of spandex were low at the moment because of the slowdown in the textile industry, they were expecting them to start rising. “So far, the prices of spandex are hovering around Rs 370- Rs 380 per kg for 40 and 70 deneirs and at Rs 470- Rs 500 per kg for 20 deneirs. But the prices have now started showing an upward swing as demand increases,” he added.

New Delhi, February 12
Facing competition from smartphone makers like Samsung and Nokia, Blackberry-maker Research in Motion has chalked out aggressive plan for India of increasing its footprint to 160 cities, besides launching new devices and latest Operation System 10 soon.

The BlackBerry maker has a presence in about 80 cities in the country now and is keen to tap the burgeoning demand for smartphones here.

"In terms of expansion, we would like to strengthen our existing presence. As far as new cities are concerned we would like to double our presence this year and go to every city which has a demand for smartphones," RIM India Head Sunil Dutt said.

He, however, declined to comment on investment details.

RIM started its operations in India in 2004 and has presence in over 80 cities across more than 4,000 retail points of presence. It has three national distributors - Redington India, Brightpoint India and Ingram Inc.

Its portfolio in India includes the Curve, Bold and Torch series. The company also sells CDMA smartphones like BlackBerry Tour 9630, BlackBerry Curve 8530, BlackBerry Style 9670 and BlackBerry Curve 9350.

RIM shipped about 14.1 million BlackBerry smartphones and approximately 150,000 BlackBerry PlayBook tablets in Q3 FY12.

During the same period, its subscriber base grew to nearly 75 million, up 35 per cent year-over-year. RIM does not provide country-specific details.

Talking about its latest operating system, Dutt said, "The OS 10 would be available from second half of 2012." The new operating system could be RIM's answer to other OS' like Windows Phone, Android, iOS and Samsung’s Bada.

The smartphone market in India is estimated to be about 85 lakh devices in 2011 and is expected to double this year.
— PTI

New Delhi, February 12
In a major crackdown, the Income Tax Department has under its scanner more than 22 crore instances of high-value transactions in the country and abroad which include unreported credit card operations and deals in real estate.

The department has obtained, through its data mining and intelligence tools, instances of unreported transactions involving an estimated amount over Rs 2,000 crore.

"The department is on the job to verify all the details of these unreported deals and a major operation is already underway in the country," a top I-T official said here.

The total deals under the probe lens are 22,52,06,979, the official said.

The step is seen as a major drive to garner as much revenue as possible by the I-T before the fiscal closes and the budgetary target of Rs 5.32 lakh crore is achieved.

According to the official data of the tax department, its officials are working on sale and purchase of house property by 6,23,384 individuals worth Rs 30 lakh each.

These transactions were made during 2009-10 and 2010-11 financial years.

The department is also working on 27,50, 545 individual cases where cash deposits aggregating to Rs 10 lakh or more were made in savings bank account during the same fiscal.

Under the I-T scanner are 15,23,728 individuals who made payments of Rs 2 lakh or more against their credit cards in the same fiscal while 32,21,695 individuals who acquired mutual fund schemes of Rs 2 lakh or more, bonds or debentures of Rs 5 lakh and above, shares issued by companies worth Rs 1 lakh and RBI issued bonds worth Rs 5 lakh and more.
— PTI

Mumbai, February 12
Diamond exporters are raking it in after rough diamonds from Zimbabwe began flowing into India from last month.

"Restrictions on trade in diamond "roughs" from Zimbabwe were lifted in November last year and imports have started in a big way from January this year," says Abhay Mehta, a diamond merchant with operations in Mumbai and Surat.

Diamonds from Zimbabwe, known as "Marange" diamonds, are imported in India by a consortium of diamond merchants in Gujarat known as the Surat Rough Diamond Sourcing (India) Ltd. (SRDSIL). "Rough" stones imported by SRDSIL are auctioned among members of the consortium.

According to trade sources, Zimbabwe ‘roughs’ are available at $40 per carat as against $100 per carat for stones from South Africa and other places.

According to Rapaport, a trade publication, as much as 11 million carats of ‘Marange’ diamonds are expected to enter the global market.

Much of these are expected to make way to Gujarat and Rajasthan, which account for the bulk of the international trade in small polished stones.

"Many small diamond merchants who faced shortage of stones will not have any problem with the availability of Zimbabwe diamonds," says Bharat Sanghvi, another merchant. With the price of finished diamonds showing no signs of softening, merchants here hope to make a killing with fat margins by polishing stones from Zimbabwe.

Chandigarh, February 12
To mark the 150th birth anniversary of Swami Vivekananda, former CMD of Delhi Metro Rail Corporation (DMRC) E Sreedharan was conferred upon with Rs 10 lakh IIPM-Swami Vivekananda Memorial Prize in recognition to his sincerity towards work, honesty and integrity.

The award was given to Sreedharan by Dr Malay Chaudhuri, founder director and IIPM awards committee chairman, in New Delhi recently.

Speaking on the occasion, Sreedharan said, “I’m happy to receive prize and thank the IIPM where I got the opportunity to associate with a legendary man who believed in serving the society as well as individual growth.”

Q. I am a senior citizen above 75 years. I have suffered loss of hearing and am using hearing aids for both the ears. The Disability Board of Government Medical College & Hospital Chandigarh has issued me a disability certificate which states:-

“Has been diagnosed as a case of acquired deafness. He is permanently disabled by 83% with respect to ears as evaluated according to the manual for ENT surgeons in evaluating permanent physical impairment disability (compiled at ALMICO/AIIMS (Rehabilitation Council of India) manual)”.

Kindly advise how much rebate I can claim in my income tax returns on account of this disability.

— Ved Parkash

A. A resident individual assessee can claim a deduction of Rs 50,000 against his total income in case he is suffering from a disability. Such a person, if suffering from a severe disability, can claim a deduction of Rs 1,00,000 from assessment year 2010-11 and onwards. Since you have been certified to be a person suffering from 83% of hearing disability, you should be able to claim deduction of Rs 1,00,000 being a person suffering from a severe disability. According to the provisions of Section 80U of the Act, a person with a severe disability means a person with 80% or more of one or more disabilities, as referred to in sub-section (4) of Section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996). Hearing impairment is covered within the provisions of the aforesaid section.

Q. I am a regular reader of your column. I appreciate your expert guidance in tax matters. I request you to kindly favour me with your expert opinion on the following issue:

Under Section 80E of the Income Tax Act, an assessee is entitled for a deduction for payment of interest on loan from any financial institution. The loan should have been taken for purposes of pursuing higher education of self, spouse/any child.

I have availed an education loan from a bank (loan availed during year 2008-09) for the higher education of my son (loan is in the name of my son and my name appears in loan documents as a co-borrower) and I am paying the interest on the same out of my taxable salary every year. My employer is refusing to grant me the deduction of interest paid by me to bank under Section 80E (for financial year 2011-12) on the following grounds;

(a) That the loan has been taken for higher education of my son who is studying abroad/foreign country, and not in India.

(b) That the education loan availed from bank is in the name of my son and my name (assessee name) appears there as a co-borrower.

Is my employer correct in denying me the benefit on both these counts?

— Sourbh Gupta

A.The objections raised your employer are not correct on account of the following reasons:-

(a) The amount of interest has been paid by you.

(b) You are a co-borrower and therefore it cannot be stated that the amount has not been borrowed by you. I assume that the reason for your being a co-borrower is on account of your age.

A. The receipt for donation should normally mention the letter number and the date by virtue of which the exemption under Section 80G of the Act has been granted. This is all the more essential in view of the Circular No. 7/2010 dt. 27.10.2010, according to which the charitable trusts which were granted exemption prior to the amendment have to apply again and get such permanent exemption. The receipt issued to you in my opinion, therefore, does not comply with the requirement for the grant of deduction under Section 80G of the Act.

Q. My query is related to TDS u/s 194C on railway freight. Sir, work definition specifically says that “Work includes the transportation of goods and passengers by any mode of transport other than by railways”. My question is whether here railways means the railways department only or it also applies on private parties who transport the goods through rail e.g. Gateway Rail Freight Ltd.

— Pankaj Kumar

A. The provisions of Section 194C of the Act are applicable to the payments made for carriage of goods and passengers by any mode of transport other than by Railways. In case the freight payments are made directly or through someone to Railways, the provisions of the aforesaid section should not be made applicable for the payment of such freight.

Q. My date of birth is 10.3.1952. Kindly advise from which financial year/ assessment year I am entitled to claim tax exemption allowed for senior citizens as per the Income Tax Act and under which Rule(s) as per budget for 2011-12. Kindly also work out my income tax. My income is as follows:

Total income 4,60,000

Income from
other sources 75,000

Total: 5,35,000

Savings under 80CC 1,00,000

Taxable income 4,35,000

— RB Singh

A. You would be entitled to claim the status of senior citizen for the financial year 2011-12 since you would be completing the age of 60 years by 10th March, 2012. The tax payable for the assessment year 2012-13 (financial year 2011-12) on the total income of Rs 4,35,000 would be Rs 19,055.

Do you plan and invest or you invest and then plan. Sounds confusing, but after a little introspection, you get the answer. I am sure most of you would be implementing the second option i.e. invest first and then plan accordingly to meet your future goals. People invest in different asset classes and investment options; and then plan to allocate those investments for achieving their goals. This is the most common mistake investors make. The right strategy and option is to plan for your future goals and then invest accordingly for achieving it successfully.

Like Shekhar who is keeping all his savings in a fixed deposit which, he plans to utilise for his daughter’s marriage after 10 years. But do you think his investment will suffice for his daughter’s marriage. Will this amount after 10 years beat the inflated cost of marriage?

That is the reason why you need to plan first and then invest.

Why do you need to plan?

It is very important and necessary to plan before investing because you need to know the exact asset allocation required for achieving your goals. You need to know when and where your money needs to be invested. Asset allocation depends on the duration earmarked to achieve your goals and your risk appetite. For your short-term goals, you should invest in debt instruments, while for long-term goals you can have an exposure to equity depending upon your ability to take risk. Asset allocation also helps you to diversify your portfolio.

Your investment should be able to beat inflation. It means that investments made by you should fetch you higher returns than the rate of inflation so that the future investment value helps you to achieve the inflated (raised) cost of your goals. Your investments should not be eaten up by the rising inflation.

You should also know that whether your existing investments will bear fruits in future and how can these be allocated to achieve any of your goals. Most of the people invest by taking advice from their friends, relatives, colleagues or agents.

People usually mix investment and insurance by buying ULIPs or traditional plans. You need to separate your insurance and investment requirements as both serve different purposes.

Generally, people mindlessly buy insurance policies, but they don’t know whether they really require that amount of life cover or is it just inadequate. Insurance should also be an important part of your plan. You should have an adequate insurance so that in case of your untimely death, your family doesn’t suffer. The family need not compromise in their lifestyle or their goals even when you are not there. The insurance proceeds are helpful in fulfilling the goals. As a thumb rule, a person should have insurance of 10 to 12 times of his annual income. But need-based insurance approach is always suitable, since it takes all your assets, liabilities and goals into consideration. You also need to see that you have adequate health insurance coverage as well.

You also need to take into account tax aspect of your investments. You have to take care of the taxes applicable on your investments. Generally people open their eyes at the end of the financial year and hurriedly invest to save tax. It is better to take care that you do not invest in excess in tax- saving instruments, which unnecessarily lock your money, nor in deficit that you end up paying more tax.

Thus, it is necessary to plan before investing for successfully achieving your goals. If you think it is difficult for you to plan, then nowadays a lot of financial planners are available, known as Certified Financial Planners, who specialise in making customised financial plans keeping your income and goals in mind. Accordingly, he suggests you suitable investments which are good enough to successfully achieve your goals.

As it is said “you should think before you act”, you also need to plan before you invest.

The author works for
apnapaisa.com, a price and features comparison engine for loans and investments.
The views expressed are his own.

The markets continued their upward journey but have shown the first few signs of fatigue setting in. We had two days of correction in the week and the lowest net gains on a weekly basis in the rally which is now six weeks old. The BSE Sensex gained 143.73 points or 0.82% to close at 17,748.69 points. The NSE Nifty gained 55.75 points or 1.05% to close at 5,381.60 points. The broader indices outperformed the benchmark indices and the BSE100, BSE200 and BSE500 gained 1.30%, 1.43% and 1.60%, respectively. The BSE Midcap and BSE Smallcap were bigger gains and clocked gains of 3.32% and 3.06%, respectively.

Among the sectoral indices, BSE Realty was the outperformer with gains of 5.79%, BSE Metal up 4.12% and BSE Bankex up 2.95%. In individual stocks, JSW Steel was a big gainer up 15.23%, REC up 8.52 and TCS up 5.34%. Hind Unilever was the odd man out and closed with losses of 3.23%.

The week saw markets losing ground on Tuesday. This was in sharp contrast to the “Terrific Tuesdays” that we saw on all the five Tuesdays of January. It would be interesting to recall that the markets gained a staggering 1,622.79 points or 93.94% of the monthly gain of 1,738.63 points on the five Tuesdays. This time on Tuesday, we lost 85 points on the Sensex and 26 points on the Nifty.

The rupee lost some ground during the week and closed at Rs 49.42 to the US dollar. FIIs continued to be buyers with net purchases of Rs 3,100 crore in the week while domestic institutions were net sellers to the extent of Rs 590 crore. In global events, the Greek crisis is coming to a boil with the government now having to talk to the people of the nation and agreeing to sacrifices that they would have to make if the bailout package is to be implemented and this would be the most difficult part of any settlement. This would be a key development which would be keenly watched next week.

Tata Steel reported a net loss of Rs 603 crore for the quarter ended December, 2011, on a consolidated basis. The loss is on account of an inventory write off on the European operations. Oil marketing companies HPCL and BPCL reported huge profits for the quarter on the back of receiving subsidies from the government which got clubbed in the third quarter. There would be no point in extrapolating the Q3 results to try and anticipate full-year results as these companies have made losses for the nine-month period.

The industrial production numbers came in at 1.8% for December, 2011, and were below expectations. This could be a cause for worry going forward and could derail the current rally which has gained a staggering 17.26% on the Sensex in 6 weeks and 18.77% on the Nifty. If one were to just extrapolate this gain we would be talking of the indices gaining 1.5 times the level that they were at the end of December, 2011, which looks unlikely.

SBI, India’s largest bank, will report results on Monday, which could give further direction to the markets. Incidentally, this is also the last week for reporting results for the December quarter and the overall picture of results so far is that there is a slowdown with the rate of sales growth slowing down and the net margins dropping. This week could see this summary of results further getting impacted.

Coming to the week ahead, it appears that the markets have rallied well and now need some consolidation before going forward. The rally that has been driven by liquidity has been very strong and swift and has certainly changed the sentiments of the market and investors alike. The markets are back to levels of August, 2011, and can no longer be considered cheap as far as investment is concerned. We have begun to become expensive and caution needs to be exercised. The BSE Sensex has a support at 17,655, then at 17,579, then at 17,357, then at 17,278 and finally at 17,055 points. It has resistance at 17,883, then at 17,985, then at 18,146, then at 18,285 and finally at 18,440 points. The NSE Nifty has support at 5,339, then at 5,304, then at 5,252, then at 5,222 and finally at 5,174 points. It has resistance at 5,425 points, then at 5,478, then at 5,512, then at 5,536 and finally at 5,584 points. The markets look like they are tired and need to consolidate before the next rally begins. The earlier the consolidation or correction the stronger and healthier would be the rally. Play for the correction this week.

The author is founder of KRIS, an investment advisory firm. The views expressed are his own.

Market Pointers

Market continued its uptrend for the sixth straight week on inflows from FIIs

The BSE Sensex gained 143.73 points or 0.82% to settle at 17,748.69 for the week ended February 10. The Sensex has rallied 555.14 points or 3.22% in February so far and has surged 2,293.77 points or 14.84% in calendar 2012 so far.

FIIs have bought shares worth `7892.67 crore in the first seven trading sessions this month, while FIIs’ net purchases touched `10,357.70 crore in January, as per the data from SEBI

In the coming week, the market focus will shift to expectations from Union Budget 2012-13. On the macro front, the government unveils monthly inflation data for January 2012